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Jewish college accused of defrauding Pell Grant program

Kim Kozlowski
The Detroit News

The U.S. Department of Education has cut off federal student aid to a Jewish college in Oakland County after allegations grants were obtained fraudulently for students who studied in Israel — but had no intention of getting a degree from the Michigan Jewish Institute.

Between 2006-12, nearly 2,000 area residents who were living and studying in Israel obtained federal Pell Grants while enrolled at MJI, a private college in West Bloomfield at The Shul Chabad-Lubavitch. But not one of the students who received a Pell Grant ever physically attended a class or graduated from MJI, according to a Feb. 26 letter federal officials sent to the college’s president, Rabbi Kasriel Shemtov. The pattern appeared to be ongoing, based on a recent review of students.

The department also charged that MJI had inadequate records and gave inaccurate information to the Accrediting Council of Independent Colleges and Schools.

In the letter outlining its investigation, federal officials said MJI breached its fiduciary duty, did not act competently or with integrity and its “misconduct will not be tolerated the department.”

“Evidence the department has reviewed shows that many, if not most, students of MJI had no interest in obtaining or intention of receiving a degree or certificate offered by MJI,” the letter said. “Rather they were ‘enrolled’ in MJI, by MJI for the sole purpose of getting MJI Pell Grants, while these students ‘studied abroad.’ Such abuse of the Pell Grant program is unacceptable.”

Shemtov could not be reached for comment. But in a statement sent by Mort Meisner Associates, MJI denied all of the allegations.

“Its decision is inaccurate, relies on hearsay, speculation, and information that would not be admitted into any court of competent jurisdiction as credible evidence,” the statement said. “It is arbitrary and capricious in the extreme.”

Additionally, MJI noted recertification has no right to an appeal or a hearing before an administrative judge but it would still file documentation to rebut the charges.

“In other words, after having been considered an eligible institution by the department for about 17 years, its eligibility has been terminated without due process,” the statement said. “The department’s action is extremely harmful and unfair. MJI will contest the action to the fullest extent possible.”

Last July, federal agents seized thousands of documents in more than 130 boxes of files during a raid at the MJI and the affiliated Orthodox Jewish group which houses the college campus. Most of the boxes were filled with student records and included one labeled as “Pell Grant fraud.”

Pell Grants are funding from the federal government for low-income students to mitigate the costs of college and do not have to be paid back.

To receive a Pell Grant, a students must be a “regular” student of a college, according to the letter. That means a student is either enrolled or accepted for an enrollment at a higher education institution for earning a degree, certificate or other credential at that institution.

But during a review of documents and after interviewing several students, department investigators found that not to be the case at MJI.

For instance, the department’s Office of Inspector General interviewed one student who said MJI told her she could attend a program in Israel, get funding to travel there, study at a seminary and earn college credits, according to the letter. She signed up for MJI’s program to help defray the costs of the trip to Israel, but did not attend MJI, even though her transcripts indicated she had signed up for a bachelor’s degree in computer information systems. MJI received a Pell Grant of $5,350 on the student’s behalf.

It is not clear if MJI will face charges or how many federal dollars were funneled to students in Israel. But the maximum Pell Grant for the 2014-15 was $5,730 for students enrolled on a full-time, full-year basis, according to MJI’s website.


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